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Investor Insight: Banks challenge investor acquisitions

In this episode of Investor Insight, CREW TV explores the new financing pressures facing investors. The question is should you sell any property knowing that you may not be able to come up with the financing to buy another.

Video transcript below:

Jemima Codrington: Ah, the good old days when cheap property and cheap money made for expensive lifestyles. Perhaps times changed. Hi, I’m Jemima Codrington and welcome to this week’s episode of Investor Insight.

Oh yes times have changed. Investors, both new and experienced are finding rental doors closed to them. Rental plans are being slashed and acquisition plans are being put on hold. Seasoned investors you are right in asking,” does it make sense to sell property when replacing it is so easy?”

Nick Karadza, Real Estate Broker, Rock Star Real Estate Inc.Nick Karadza: I really feel like this is a grass is greener on the other side type of question, because everyone is always looking for the next investment, the better investment, maybe bigger investment. So in today’s challenging financing environment, it may not necessarily be the best move to get rid of a property, if the numbers on the property and the return on that investment are working out well. The first thing that you want to do is really evaluate the opportunity you are looking at.

Make sure you get a really strong grasp and a very realistic perception on what the return on that investment would be, what the numbers would look like and then make the decision based on those numbers. So the same principles hold true today as they would in any other financing environment.

Jemima Codrington: But focussing on acquisition costs can derail good and viable investment plans. In fact the most expensive property could be the best one.

Ruben Furtado, RealtorRuben Furtado: By focussing on costs, it’s really going to turn around effective behaviour and they are going to limit their spend in areas where they potentially should spend and in doing so, they are not necessarily focused on the actual opportunity and that’s exactly what happens. They only make what they are willing to spend.